Brady v. Trans World Airlines, Inc. (401 F.2d 87, 1968)

OPINION OF THE COURT

FORMAN, Circuit Judge.

This litigation, protracted over more than eleven years, concerns the suit brought by Vincent P. Brady against his union, The International Association of Machinists (IAM), for breach of its duty of fair representation, and his employer, Trans World Airlines, Inc. (TWA), for wrongful discharge violative of the Railway Labor Act. In an order filed November 4,1963, the United States District Court of the District of Delaware found against TWA and IAM on the issue of liability. By its order filed September 6, 1966, Mr. Brady was awarded damages by way of back pay and reinstatement in both his former employment and in his union membership. From these and previous orders TWA and IAM appealed. Mr. Brady has cross-appealed maintaining that the District Court erred, among other things, in so far as it limited the recoverable damages.

The complicated factual background of this case has been amply set forth in the several opinions of the District Court. Therefore the particular facts will be adverted to herein only as they are necessary for a general understanding of the several issues raised in these appeals.

In 1951, Mr. Brady, who was previously employed by TWA, was rehired as a line mechanic and worked at the Philadelphia International Airport until May 15, 1956, the date of the alleged wrongful discharge. During this period he was a member of Local Lodge 1776 of IAM. In October 1955, a campaign was begun to raise the membership dues of Local 1776. At the November 1955 meeting the lodge members voted to raise the dues for persons in Mr. Brady’s classification from $3.00 to $3.25 per month. Many members of the lodge who like Mr. Brady, had not been present, complained to him, as a shop steward, about the dues increase because they had not received sufficient notice of the time and place of the November meeting. At the December meeting, the members adopted Mr. Brady’s motion that the prior dues increase be rescinded; that the issue be brought before the next general membership meeting after the posting of due notices. Nevertheless, notices were not posted and

the general membership meeting was not held in January. In protest to what he considered to be an illegal dues increase, Mr. Brady refused to pay his monthly dues at the new rate. Frequently thereafter he tendered his dues at the old rate and since these tenders were always rejected the record indicates that his last dues payment was for November 1955.

In January 1956, Gerald C. Coleman became the financial secretary of Local Lodge 1776. Shortly after assuming his office, Mr. Coleman began a program to collect all back dues from members of the lodge. On February 15, 1956, he posted a list of the nine members who on that date still owed dues for two or more months. Mr. Brady was then listed as owing dues for December and January. This posted notice threatened the nine members with action from the district office unless the dues were paid within ten days. At the end of this ten day period, of those listed, only Mr. Brady, who continued to tender dues at the $3.00 rate, remained delinquent.

On March 3, 1956, Mr. Coleman cited Mr. Brady to Clifford Miller, General Chairman of District 142, which had jurisdiction over Local Lodge 1776, for his dues delinquency and sought discharge action. Mr. Brady received a letter dated March 13, 1956, from Mr. Miller advising him that he had not complied with the union security provisions of the TWA-IAM collective bargaining agreement and that unless he paid outstanding dues for four months including those of March, by March 28, he would be discharged from his employment by TWA. In response to this letter, on March 27, 1956, Mr. Brady tendered his dues book and a check for $10.50 to Mr. Coleman. On instructions from Mr. Miller, Mr. Coleman wrote Mr. Brady on March 28 rejecting his tender as insufficient. For the first time, he demanded payment by April 4 of a $25.00 reinstatement fee, allegedly due pursuant to the IAM Constitution, and $9.75 for three months dues.

Mr. Brady feared that if he paid a reinstatement fee he would lose the five year seniority that he had accumulated with TWA. On April 3, 1956, Mr. Brady filed his first appeal with the TWA-IAM System Board of Adjustment (Board). On April 7, 1956, Mr. Coleman wrote to Mr. Miller advising him of Mr. Brady’s failure to make payment as demanded. Mr. Miller, on April 9, 1956 certified to TWA that Mr. Brady should be discharged for violating the union security provision of the collective bargaining agreement. On April 10, TWA notified Mr. Brady of this certification.

At this point, Mr. Miller realized that Mr. Coleman had misunderstood the instruction given him and had mistakenly demanded in the letter of March 28,1956, both a reinstatement fee and outstanding dues. Mr. Miller immediately cancelled Mr. Brady’s discharge certification and on April 11, wrote to Mr. Brady explaining Mr. Coleman’s error and demanding only payment of the $25.00 reinstatement fee by April 26. Mr. Brady answered Mr. Miller’s letter by offering to pay all dues outstanding but requesting that he should be permitted to forego the reinstatement fee. Mr. Miller rejected this offer and

again demanded the reinstatement fee. On April 24, Mr. Brady filed his second appeal to the Board arguing that he had not violated the union security provisions of the collective bargaining agreement. This appeal was dismissed at a hearing on May 4 as premature since it had been filed prior to May 1, 1956, the date of a second certification for discharge which Mr. Miller had sent to TWA. On May 5, 1956, Mr. Brady made a third appeal to the Board protesting the May 1 certification. A hearing was held on May 14,® and the Board ruled that the discharge was proper under the union security provisions of the collective bargaining agreement. Accordingly, Mr. Brady was discharged from his employment by TWA effective May 15, 1956.

After unsuccessfully seeking a rehearing by the Board, on the charge that Mr. Miller had misrepresented facts at the hearings of May 4 and May 14, Mr. Brady, on April 22,1957, filed a complaint in the District Court charging IAM with hostile discrimination in breach of its duty of fair representation and TWA with wrongful discharge in violation of the Railway Labor Act. Mr. Brady sought relief against IAM and TWA by way of reinstatement in the union and in his employment together with compensatory and punitive damages.

I

At the outset, both IAM and TWA challenge the subject matter jurisdiction of the District Court. They submit that pursuant to section 204 of the Railway Labor Act, Article XII of the TWA-IAM collective bargaining agreement established a System Board of Adjustment to adjust and decide disputes or grievances arising out of the interpretation and application of the agreement. Paragraph (k) of Article XII provides that decisions of the Board in cases properly before it shall be final and binding on the parties. Article XXVI(f), one of the union security provisions, gives an employee the right to appeal his discharge to the Board. Several cases are cited which uphold the finality of adjustment board decisions and circumscribe their reviewability by the courts.

Focusing on these contractual provisions, it is argued that Mr. Brady elected to appeal to the Board, that hearings were held by that body on May 4 and May 14, 1956, and that Mr. Brady’s discharge was determined to be proper under the collective bargaining agreement. Having elected to take this appeal to the Board, the assertion is made that its adverse decision is final and binding on Mr. Brady and that the courts may not review the merits of that decision. This argument, which seeks to sustain the Board’s ruling, and to foreclose judicial review of the dispute was properly rejected by the District Court.

The Complaint in this case, as amended, charges IAM, which throughout the period in question was the plaintiff’s exclusive bargaining agent, with hostile discrimination in refusing to accept tender of Mr. Brady’s dues because of claimed delinquency, terminating his union membership and wrongfully citing him for discharge from his employment with TWA, actions which, it is alleged, IAM did not take against other members of Local Lodge 1776 who were said to be delinquent in the payment of their dues. Furthermore, IAM is charged with hostile discrimination in misrepresenting the facts pertaining to Mr. Brady’s alleged dues delinquency at the hearings before the Board. These allegations make it clear, as the District Court noted, that plaintiff’s controversy is primarily with his bargaining agent rather than his employer.

The propriety of disregarding the ruling of the Board is justified by an examination of the Board's statutory jurisdiction. Section 204 of the Railway Labor Act authorizes the establishment of air carrier adjustment boards and sets forth their jurisdiction as follows:

“The disputes between an employee or group of employees and a carrier or carriers by air growing out of grievances, or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions, * * * may be referred by petition of the parties or by either party to an appropriate adjustment board, * * * »

Subsequent language of this section limits the jurisdiction of air carrier adjustment boards to that granted to railway carrier adjustment boards as provided in section 3 of the Railway Labor Act. The jurisdiction of railway carrier adjustment boards has been construed as encompassing disputes between employees and their employers, but not disputes between employees and their bargaining representatives. In Conley v. Gibson, union members brought a suit against their bargaining agent for breach of its duty of fair representation. Their complaint was dismissed on the ground that the adjustment board had exclusive jurisdiction over the controversy. The Supreme Court reversed, stating:

“But § 3 First (i) by its own terms applies only to ‘disputes between an employee or group of employees and a carrier or carriers.’ This case involves no dispute between employee and employer but to the contrary is a suit by employees against the bargaining agent to enforce their statutory right not to be unfairly discriminated against by it in bargaining. The Adjustment Board has no power under § 3 First (i) or any other provision of the Act to protect them from such discrimination.”

The District Court, relying on Conley, correctly ruled that since the Board was without jurisdiction to hear Mr. Brady’s claim, which essentially charges IAM with hostile discrimination, the Board’s decision could not bar judicial review of the merits of that controversy. That the employer was joined to afford complete relief and that the dispute may incidentally involve construction or interpretation of the collective bargaining agreement does not change the basic fact that the Railway Labor Act does not authorize adjustment boards to hear an employee’s dispute against his union.

There is good reason for denying the jurisdictional authority of adjustment boards in so far as controversies between employees and their bargaining representatives are concerned. The membership of such boards is designed to give representation to management and to the union. Normally the board’s composition would present no problem since its express statutory authority is to hear grievances between employees and their employers arising out of the collective bargaining agreement. In such a dispute the employee would expect his union, acting under its duty to prosecute fairly the grievances of its members, to represent him before the board. This scheme, however, overlooks the possibility that the union’s interest might conflict with the employee’s and this is especially so in cases where the employee is charging the union with hostile discrimination. In such circumstances, the union can hardly be expected to press the employee’s claim vigorously and forthrightly. The District Court’s statement on this point bears reiteration:

“It is simply repugnant to our standards of fundamental fairness and totally unrealistic to require an employee to submit a dispute he has with his bargaining agent for final determination to persons selected by and representing the bargaining agent.”

The decision of this court in Bower v. Eastern Airlines is relied on by IAM and TWA as requiring a recognition of the Board’s ruling as final and binding upon the parties. In that case, Bower, having been discharged from his employment, appealed to the board charging his employer with wrongful discharge. The board sustained the discharge and Bower then reasserted the same claim in the District Court. This court held that the employee, having elected the administrative remedy in seeking settlement of a dispute concerning his employment could not obtain a judicial reexamination of the merits of the dispute. But the court went on to say: “This does not foreclose the consideration of questions of jurisdiction or of the essential fairness of the administrative proceedings, even when these issues are raised collaterally.” The situation presented by the present case seems to come squarely within the caveat of Bower. Moreover, it is significant that in Bower, and like cases advanced with it, employees sought relief against their employers and not their unions.

The conclusion that because the Board lacked jurisdiction to hear the dispute its decision does not preclude an independent judicial review of the controversy, of course, does not itself establish the District Court’s jurisdiction. Here, the District Court, however, properly found that Mr. Brady had pleaded causes of action invoking federal jurisdiction under 28 U.S.C. §§ 1331, 1337.

It is now well established that fan exclusive bargaining agent has a fiduciary obligation imposed by federal ¡law to fairly represent all those employees in the bargaining unit in the negotiation, administration, and enforce¡ment of collective bargaining agree-i ments. The federal courts have subject ! matter jurisdiction to enforce this statu- ¡ tory duty of fair representation which j imposes on the union an obligation to ! serve the interests of all members without t hostility or discrimination toward any, |to exercise its discretion with complete | good faith and honesty, and to avoid arbitrary conduct. Although this duty imposed on the bargaining agent was originally restricted to the prevention of hostile discrimination based on racial prejudice, it is now recognized that the statutory power conferred on unions imposes on them a corresponding duty which encompasses the prohibition of all forms of hostile discrimination. —-

Mr. Brady sets forth in his complaint, as amended, allegations of “wilfull and deliberate” discrimination by the IAM, such as the arbitrary invocation of union security provisions which caused him to be discharged from his employment by TWA. These allegations clearly constituted a claim against IAM cognizable in the District Court. The assertion of TWA that the court lacks jurisdiction over the employer in such a suit has been clearly answered by the Court of Appeals for the Second Circuit in Cunningham v. Erie R.R. In that case, which is strikingly similar to the instant case, the court stated:

“If the District Court has jurisdiction to proceed against the union it is clear, we think, that it has also power to adjudicate the claim against the railroad. It would be absurd to require this closely integrated dispute to be cut up into segments.”

Apart from the foregoing, Mr. Brady has stated other grounds which validly invoke the jurisdiction of the District Court against both IAM and TWA. He charges both defendants with causing his discharge in violation of section 2 (Eleventh) of the Railway Labor Act which, in part, provides;

“Eleventh. Notwithstanding any other provisions of this chapter, * * * any carrier or carriers * * * and a labor organization or labor organizations duly designated and authorized to represent employees in accordance with the requirements of this chapter shall be permitted—

“(a) to make agreements, requiring, as a condition of continued employment, that within sixty days following the beginning of such employment, or the effective date of such agreements, whichever is the later, all employees shall become members of the labor organization representing their craft or class: Provided, That no such agreement shall require such condition of employment with respect to employees to whom membership is not available upon the same terms and conditions as are generally applicable to any other member or with respect to employees to whom membership was denied or terminated for any reason other than the failure of the employee to tender the periodic dues, initiation fees, and assessments (not including fines and penalties) uniformly required as a condition of acquiring or retaining membership.”

There is no need to repeat the District Court’s lengthy and careful analysis of this provision, its intended purposes and its effect on the court’s jurisdiction of the present case. In sum, the District Court reasoned that section 2 (Eleventh), which permits union shop agreements within prescribed limits, was intended as a proviso to section 2 (Fourth) (Fifth), which prohibited all employer conduct designed to influence or coerce employees to join or maintain membership in a labor organization. In so analyzing the Railway Labor Act the District Court considered Mr. Brady's complaint as alleging that his discharge was not protected by the exception to prohibited employer conduct (section 2 (Eleventh)) and because his discharge was designed “to influence or coerce employees in an effort to induce them to join or remain * * * members of [a] labor organization”, it violated the anti-discrimination provisions of section 2 (Fourth). The District Court further reasoned that since the court’s jurisdiction over complaints alleging violations of section 2 (Fourth) was clearly established, that jurisdiction should encompass suits involving section 2 (Eleventh), the proviso to section 2 (Fourth).

It is the contention of TWA and IAM that this case involves the interpretation and application of the union security provisions of the collective bargaining agreement and, therefore, the adjustment board has exclusive jurisdiction. This argument, which assumes that public statutory rights, when incorporated in a collective bargaining agreement, become exclusively private contract rights, is a reiteration of the same argument that was rejected by the District Court. Under the view expressed by TWA and IAM, an employee who seeks to regain his job after being discharged for alleged nonpayment of dues is required to appeal to the adjustment board, which consists of an equal number of representatives of the employer and the union. By permitting a limited form of union shop in section 2 (Eleventh), Congress intended to relax the anti-discrimination provisions of section 2 (Fourth) (Fifth). In so relaxing them, it did not intend an appeal to the adjustment board as the sole recourse for an employee seeking reinstatement in his employment after being discharged for alleged non-payment of his union dues. Otherwise, in such a dispute, which pits an employee against his union and his employer, the very parties whose power he challenged, would have the additional power of deciding whether they had exercised it in a proper manner. The District Court properly concluded that “if applieation and interpretation of 2 (Eleventh) is the sole province of Adjustment Boards, then Congress did not ‘relax’ the prohibitions of 2 (Fourth) (Fifth) by enacting 2 (Eleventh); it repealed them.”

The jurisdiction of the District Court over the subject matter of this suit was well founded in view of the allegations in the complaint as amended of hostile discrimination and of violations of Mr. Brady’s rights under section 2 (Fourth) (Eleventh) of the Railway Labor Act.

^

The suit was heard by the District Judge without a jury first on the issue liability and later on the question of damages. He construed the complaint as raising alternative grounds for relief —a claim for hostile discrimination in breach of the bargaining agent’s duty of fair representation, and a claim for wrongful discharge in violation of section ^ (Fourth) (Eleventh) of the Railway Labor Act. After the hearing on liabili^y, District Court ruled that because Mr- Brady had proven facts sufficient to support recovery on the second claim, it would not make findings on the hostile discrimination claim,

The District Court found that under the union security provisions of the TWA-IAM collective bargaining agreement, an employee, in order to continue his employment, was required to maintain membership in good standing in the union by paying his monthly dues not later than the last day of the following ealen-dar month. Under this standard, the December dues were payable by the end of January, those for January by the end of February and those for February by March 31. The District Court ruled that IAM’s March 13 demand for four months dues by March 28 was clearly excessive since Mr. Brady was then only in arrears for two months, or $6.50. Thus, when Mr. Brady responded to the letter of March 13 by sending his dues book with $10.50 to the financial secretary of the local lodge, his tender was more than sufficient to pay his two months’ arrear-age, and being valid, it precluded his discharge. Nor was any change wrought in the situation when IAM, by its letter of March 28 to Mr. Brady, rejected his tender as insufficient to cover three months dues of $9.75 and a reinstatement fee of $25 for which payment was required by April 4. The rejection on the ground that the tender did not include the reinstatement fee was gratuitous for no such demand was made in the letter of March 13.

Under the IAM constitution a three months dues delinquency results in the automatic cancellation of membership and to regain union membership a reinstatement fee must be paid. Although the collective bargaining agreement mentions reinstatement fees in its definition of dues, it does not specify when they are to be imposed. The District Court assumed that the IAM constitutional provision for a reinstatement fee was validly incorporated into the collective bargaining agreement by the “oblique reference” to such fees, and reasoned that this constitutional provision must be read in conjunction with the collective bargaining agreement which is the governing document under section 2 (Eleventh). On this approach the District Court found that the collective agreement postpones a delinquency until the end of the following calendar month. It therefore concluded that the three months delinquency did not occur until after March 31 and IAM could not properly impose a reinstatement fee, as it did, in its letter of March 28.

The basis for the District Court’s reconciliation of the two documents was its view that the policy underlying section 2 '(Eleventh), which validates a union security provision when incorporated into •an “agreement”, is to insure that employees will have adequate notice of their union security obligations and may rely